BHP urged to go slow on potash

Investors push for reassessment after major changes to potash market.

A major shake-up of the potash market has prompted BHP Billiton Ltd shareholders to pressure the miner to tread cautiously on tentative plans to develop its $US15 billion ($A16.6 billion) Jansen Potash project, according to The Australian Financial Review.

The newspaper reported that shareholders are urging BHP to do a deep reassessment of its potash intentions after Russia's Uralkali withdrew its support for a key joint venture with Belaruskali that formed a key role in controlling potash prices.

Uralkali said it expects potash prices to fall sharply as a result of its move.

“This is a structural change in the industry and it might actually provide the BHP board with the opportunity to reassess Jansen,” Perpetual Investments global resources analyst Andrew Corbett told the AFR. Perpetual is a BHP shareholder.

“My preference would be for them to take the conservative approach and slow it down.

“On long-term potash pricing, it is a struggle to make the numbers work.”

BHP chief executive Andrew Mackenzie had in June said its potash holdings are “a great option but just an option”, and the miner is believed to have spent all committed funds for the Canadian Jansen project, so the BHP board will have to assess whether to commit further funds to the project's development (see Robert Gottliebsen's Making BHP more like CBA).